FRE and FNM - Your positions, predictions and odds of nationalization

Hi all hope you’re all having a nice weekend.

Currently long on both.

Would appreciate your views on what is to happen on Tuesday’s opening and your views on whether nationalization will occur.

One thing I will change on Tuesday is not holding overnight as I sh*t myself on the possibility of nationalization.

Tbh, what are their current positions in the books? Are they weak and vulnerable?

Regards

 

nationalize? no.

dilation? yes. how much? no one knows.

 

if you think equity investements on 130-1 levered companies during the worst housing bust in decades and with the risk of nationalization(or stealth nationalization) are a good investment then you ought to have your head examined.

even if you are right their losses wont wipe them out AND the government dont recapitalize them what catalyst will give your gigantic return you seem to be all wet for?There is no housing rebound soon, financial stocks came back every once and while but reality keeps dragging them down even with contrarian signals all over the place.
if a piece of news comes out and says something is worth $10 but its trading at $15 the price will go down regardless of which magazine has a bearish cover on it, the news flow doesn't stop its bad and there is no end in sight

 

I went long at 3 and sold friday. I was waiting for a short squeeze but I could not hold anything over the weekend. If I miss a squeeze tuesday morning so be it. Good luck to you.

 

cheers for all the replies.

does anyone have data/info on the short v long ratio's

 

The gov't wants to bail out the homeowners, why not wait for a bail out of the share holders, we're people too.

I thought SOP of gov't, when something goes wrong is to change the name of the entity and resume business as usual.

 

Fannie Mae had $40 billion in Cash Flow from Operations in 2007. Why do we need to "bail out" a profitable company? They don't take deposits like a bank, so why does it matter if they have negative book equity? GM is getting by just fine with negative book equity.

My advice, get rid of the core capital requirements and whatever accounting requirements that are in the way. They already have de facto neqative equity anyway according to Bill Poole. I don't see a problem here.

 

I wouldn't call this getting by just fine !

http://uk.finance.yahoo.com/q/bc?s=GM&t=1y&l=on&z=m&q=l&c=

 

They are only insolvent if the regulators say they are insolvent.

 

I'm picturing Fannie and Freddie on the beach wearing very dark sun glasses.

When you consider who the shareholders are, i have to think that they will be bailed out to a considerable extent. It is unthinkable that Fannie and Freddie will be allowed to fail. I see in my crystal ball sufficient capital being available via government loans at very favorable rates. I think the proposed scheme for a government buy-in will, if it is done at all, be done in a way so as to avoid inordinate dilution. Nevertheless, being a trader and and investor and not a gambler, i am staying away from Fannie and Freddie. Certainly it will be a long time before they right themselves financially because of the upheaval in the mortgage and real estate industry.